Canada needs more than 3.5 million homes built to reach affordability, says the Housing Agency.

Canada needs to build 3.5 million homes by the end of the decade before homes are affordable again, the new report said.

Report published by Canada Mortgage and Housing Corporation (CMHC) ThursdayCanada’s approach to housing needs needs to be reconsidered before housing costs can reach the level at which average households spend less than 40 percent of their disposable income in shelters.

Aledab Iorwerth, Deputy Chief Economist at CMHC, said: a statementReleased on the same day as the report.

The agency predicts that if the current build rate continues, Canada will add another 2.3 million homes between 2001 and 2030, reaching about 19 million nationwide.

But to be affordable for all Canadians, we need an additional 3.5 million homes. In other words, by 2030, we will own 22 million homes nationwide, exceeding current expectations.

To reach #housing Due to its affordability for everyone in Canada, our research shows that Canada’s housing stock needs to grow from 3.5 million to over 22 million by 2030.

— CMHC (@CMHC_ca) June 23, 2022

According to the report, CMHC used 2003 and 2004 as a benchmark for affordable housing when the economy was stable and housing costs were relatively low in the economy.

“Around 2003-2004, the average household would have had to spend nearly 40% of disposable income and nearly 45% of British Columbia to buy an average home in Ontario.” Said the report.

“By 2021, such households would have had to spend nearly 60 percent of their income on housing.”

“Recovering affordable levels in these states means reducing housing costs by between one-quarter and two-fifths,” the agency added.

For example, the average home price for an average household in Ontario should be $ 551,000 by 2030, which should be affordable at 40% of disposable income. In contrast, CMHC’s target of $ 871,000 in 2021 was 59%.

Supply chain, labor issues

However, softening housing market conditions and labor shortages in the construction sector could prevent Canada’s housing stock from reaching more than 22 million by 2030.

“Currently, there are obvious short-term challenges as there are supply issues, labor shortages and rising funding costs,” abIorwerth told Canadian Press in an interview.

June 21, Statistics Canada report There were 81,500 vacancies in the construction sector in the first quarter of 2022, more than double the number observed in the first quarter two years ago (38,800).

In addition, the CMHC report warns that increasing housing supplies “dramatically and suddenly” will put pressure on construction costs.

Authorities said further research is needed to address these issues, but redeveloping existing residential, industrial and retail spaces into multiple residential units without the need for new construction. Proposed to increase supply to.

CMHC pointed out that supply is just one of the other factors that affect affordability. Others include government policies that affect demand, household choices, and post-pandemic telecommuting trends that are not considered in the report.

Quebec, Ontario, British Columbia Needs Boost

Housing agencies also found that two-thirds of the 3.5 million home inequality is felt in two markets, Ontario and British Columbia, which are facing significant price declines. ..

The situation in Quebec is similar, as affordable prices in Quebec have fallen over the past few years, according to the report.

In total, Ontario needs an additional 1.85 million homes, while British Columbia and Quebec will add about 570,000 and 620,000 homes over the next 7.5 years to lower home prices, respectively. You will need a house.

According to ab Iorwerth, cost savings do not necessarily mean that the value of a home is reduced. In an interview with The Globe and Mail reported on June 23, he gave an example of how to redevelop four million-dollar single-family homes into hundreds of apartments to lower average prices.

“It doesn’t necessarily mean that someone loses their home value,” he said.

According to RBC’s “Housing Trends and Affordability” report, published June 23, Bank of Canada will raise key interest rates to curb inflation and will prevent home ownership in the short term.

“The Bank of Canada’s” strong “interest rate hike campaign will further increase ownership costs in the short term and bring RBC’s nationally affordable indicators to the worst levels ever,” said Robert, senior economist at RBC.・ Hogue states in the report.

“But we expect the soaring price adjustments to ultimately bring some relief to the buyer.”

Ottawa cannot be alone

The CMHC said the federal government could not achieve affordable prices for all Canadians on its own.

“We need a partner. The private sector will be important in addressing this supply shortage,” he said, and the government should make the regulatory system as efficient as possible so that the project can be approved sooner. He added that there is.

“Developers [also] Be more productive and make the most of your land ownership to build more homes. “

Authorities further suggested that governments at all levels must be “united” to help build supply, but acknowledged that the plan was inadequate for low-income Canadians.

“Even if we achieve these goals, it is important to note that there are still many low-income households facing affordable challenges,” CMHC said.

“The purpose of this work is to look at the factors that influence the affordability of the average Canadian household, not the low-income households,” the report concludes.

Canadian Press contributed to this report.